Stocks in Tokyo and Seoul fall as North Korea fires missile over Japan

A man walks past a stock quotation board flashing the Nikkei 225 key index of the Tokyo Stock Exchange in front of a securities company in Tokyo on Aug 18, 2017.
A man walks past a stock quotation board flashing the Nikkei 225 key index of the Tokyo Stock Exchange in front of a securities company in Tokyo on Aug 18, 2017. PHOTO: AFP

TOKYO (BLOOMBERG, AFP) - Tokyo stocks fell at the start on Tuesday (Aug 29) after North Korea launched a missile over Japan that its prime minister described as an "unprecedented, serious and grave threat".

The benchmark Nikkei 225 index lost 0.70 per cent, or 136.93 points, to sit at 19,312.97 in the first few minutes of trade while the Topix index of all first-section issues was down 0.55 percent, or 8.78 points, at 1,591.34.

In South Korea, stocks opened lower on Tuesday, as investors remained worried over North Korea's latest missile provocation that could further escalate tensions on the Korean Peninsula.

The benchmark Korea Composite Stock Price Index (KOSPI) shed 11.94 points, or 0.5 per cent, to 2,358.36 in the first 15 minutes of trading, reported Yonhap news agency.

South Korea said on Tuesday it will take measures to stabilise the financial market following the latest North Korean missile launch that can fuel tensions in the region.

The Finance Ministry said it is monitoring financial markets at home and abroad and the South Korea's economy around-the-clock to effectively cope with risks posed by Pyongyang.

The government "will take necessary steps in a timely manner" in case of financial volatility, the ministry said after a joint review meeting with the Bank of Korea and other relevant financial authorities, reported Yonhap.

Tuesday's missile firings will thrust the confrontation between the US and North Korea back to the fore after the hermit kingdom had been praised by Secretary of State Rex Tillerson last week for its "restraint."

Tillerson said last week that North Korea hadn't carried out "provocative acts" since the UN Security Council imposed new sanctions earlier this month, and that Pyongyang's temperance might lead to negotiations "in the near future."

Kim Jong Un last tested two intercontinental ballistic missiles last month. North Korea had threatened earlier this month to fire a missile over Japan towards the US territory of Guam, prompting Trump to browbeat the country with his "fire and fury" comments that roiled global markets.

Japan Chief Cabinet Secretary Yoshihide Suga said Tuesday that a missile flying over Japanese territory is unprecedented, even though North Korea has made multiple threats and missile launches since last year.

"Some observers had thought US and North Korea were pursuing discussions behind closed doors, but it turns out North Korea continues to pursue missile development," said Chihiro Ohta, a Tokyo-based senior strategist at SMBC Nikko Securities.

"The risk-off stance is likely to continue even if the US responds calmly."